The introduction of Canadian real estate investment trusts (REITs) in 1993 was a monumental financial engineering marvel that minted a new asset class. It afforded ordinary individuals cheap access to usually reliable rental income and exposure to the long-term capital-appreciation potential of Canadian real estate without the nagging hassles associated with direct property ownership.
Canadian REITs remain a proven source of generally reliable monthly income distributions and a source of long-term capital gains despite a steep drop in 2022 when a diversified iShares S&P/TSX Capped REIT Index ETF generated a 17.4% annual loss. Volatility happens in the asset class, too. Rising borrowing costs and higher discount rates drag REIT valuations down.
Regardless, Canadian REITs’ income-generating potential generally remains robust, and some individual REITs are Dividend Aristocrats that cultivated a strong track record of raising their distributions every year while growing investors’ capital.
Investors just have to navigate the REIT world as carefully as they do in other asset classes.
The best Canadian REIT industries to buy in 2024
Average yields and total returns on Canadian REITs may vary widely by property type over the next year.
Industrial REITs enjoyed full occupancy rates, fast rent growth rates and high property valuations as businesses rushed to bring back their supply chains onshore post COVID-19. Valuations may slightly correct as growing supply leads to lower occupancy rates in 2024. Residential REITs usually enjoy robust demand from a growing tenant base as the population grows and housing affordability declines. Retail property occupancy rates should continue recovering well.
Unfortunately, highly leveraged and beaten-down office REITs may remain under severe pressure in 2024, as occupancy rates continue to decline after companies fell for the allure of work-from-home flexibility.
Evidently, not all REITs are the same. It’s imperative that one navigates the Canadian REIT world carefully to find dividend gems in the Canadian real estate sector, unlock capital gains, and limit the potential of buying into a struggling trust that may cut its distributions as its sustainable distributable cash flows (usually measured by adjusted funds from operations (AFFO)) dwindle.
Two dividend gems in the Canadian real estate sector to buy 2024
The most appealing attribute of Canadian REITs is their monthly distributions, especially if payouts are well supported by recurring distributable cash flow. Trusts with low AFFO payout rates below 90%, strong or rising occupancy levels, growing net operating incomes (NOI), and low leverage should do well next year.
CT Real Estate Investment Trust (TSX:CRT.UN) is a favourite Dividend Aristocrat that has been a strong performer on both the distribution growth and the capital gains front since going public 10 years ago. It currently pays a distribution that yields 6.2% annually.
The retail property trust boasts a 99.1% in-place occupancy rate; its key tenant, Canadian Tire remains an ambitious, steady-growth, financially healthy retailer that’s still expanding its geographical footprint across Canada (and thus demanding more retail space), and the trust pays one of the most covered distributions going into 2024.
CT REIT reduced its AFFO payout rate from 95% a decade ago to 73.2% by September 2023. Net operating income has galloped ahead at rates above 7% annually, and AFFO per unit growth rates have averaged an impressive 5.7% annually since 2013.
After 10 years of consecutive annual distribution raises, the trust’s monthly distribution yields 6.2% annually, and there’s room for more payout growth given income growth and manageable payout rates.
CAPREIT to remain formidable in 2024
Canadian Apartment Properties Real Estate Investment Trust (TSX:CAR.UN) , or CAPREIT, is another dividend gem in the Canadian real estate sector worth your investment in 2024. The residential REIT holds about 64,500 residential property units located in Canada and the Netherlands and has cultivated a strong 11-year dividend-growth streak.
CAPREIT’s monthly distributions look well covered. The trust paid out 60.5% of its funds from operations (FFO) during the first nine months of 2023 — an improvement from an FFO payout rate of 62% a year ago. Distributions from the $16.5 billion property portfolio currently yield 3% annually.
Leverage looks okay at a 41% debt ratio. Units trade at a discount of 10% to the trust’s most recent net asset value estimate of $54.36 per unit reported at the end of September 2023.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
